AGL has completed the business case for the Gloucester Gas Project which incorporated disappointing gas flow data from the Waukivory Pilot wells and economic modelling of the gas resource. Unfortunately, the economic returns to support the investment of 2 approximately $1 billion were not adequate. Consequently, in the interest of its shareholders and customers, AGL said “this is the most responsible course of action.”

AGL will relinquish its Petroleum Exploration Licence for the Gloucester region (PEL 285) to the NSW Government and will now commence a comprehensive decommissioning and rehabilitation program for its well sites and other infrastructure in the Gloucester region.

“Exiting our gas assets in New South Wales has been a difficult decision for the company. AGL has invested significantly in these projects and communities over the past seven years for the Gloucester Gas Project, and ten years in the case of the Camden Gas Project.

“We are proud of the dedication and professionalism of our employees and contractors in their efforts to get to this point and our work to bring benefits to the communities in which we operate. We remain committed to leaving a positive legacy in these regions,” said Mr Vesey.

AGL will establish a $2 million Independent Trust Fund and will work with the Gloucester community to identify investment options to deliver ongoing economic benefit to the region and its communities. Without the Gloucester Gas Project, there are limited opportunities for scale and efficiencies across projects, so at Camden, AGL will extract gas from its existing wells enabling closure in 2023. The Camden site and wells will be progressively decommissioned and the sites rehabilitated.

In further news, it added that AGL has taken a strategic decision that exploration and production of natural gas assets will no longer be a core business for the company due to the volatility of commodity prices and long development lead times. There is no change to AGL’s commercial or retail gas activities.